The California Supreme Court Narrowly Rules That Individuals Are Not Liable for Retaliation in Some Circumstances

The California Supreme Court rules that individual nonemployers are not liable for retaliation, but leaves open the issue of individual liability for retaliation that is in response to a complaint of harassment.

& littler www.littler.com info@littler.com in this issue: 2008 California Supreme Court rules are not liable but leaves open issue of individual liability that is in response a harassment. A S A P ™A Littler Mendelson Time Sensitive Newsletter Mendelson is the largest in the United devoted exclusively to representing management in employment and labor law matters. The California Supreme Court Narrowly Rules That Individuals Are Not Liable for Retaliation in Some Circumstances By James E. Hart In a 4-3 decision, the California Supreme Court in Jones v. The Lodge at Torry Pines Partnership, found that nonemployer individuals (e.g., supervisors) are not personally liable for claims of retaliation brought under California’s Fair Employment and Housing Act (FEHA), at least when the retaliation is not in response to actionable harassment. The case resolves an unsettled question brought to prominence by the 1998 California Supreme Court opinion in Reno v. Baird, 18 Cal. 4th 640 (1998). In Baird, the court held that nonemployer individuals cannot be held personally liable for discrimination under the FEHA because discrimination arises the performance of necessary personnel management duties” that are “an inherent and unavoidable part of the supervisory function.” By contrast, nonemployer individuals can be held personally liable for harassment, which “consists of a type of conduct not necessary for performance of a supervisory job” and is “presumably engaged in for personal gratification” or due to “meanness or bigotry, or for other personal motives.” Since Baird, the open question has been whether this reasoning extends to retaliation claims. Like discrimination claims, retaliation claims require an adverse employment action (i.e., a change to the terms and conditions of employment) that inherently arises out of the performance of supervisory functions. If the reasoning of Baird were applied to retaliation claims, then no individual liability would result. The majority opinion in Jones extends Baird’s reasoning to retaliation claims. Equally important are the rulings not made by the majority in Jones. The court declined to decide whether an individual who is personally liable for harassment might also be personally liable for retaliating against someone who opposes or reports the same harassment. Nor has the court expressly closed the door on individual liability where the adverse employment action of a retaliation claim takes the form of harassment. As a result, the issue of individual liability for retaliation claims has not been entirely resolved. Factual Background The case stems from plaintiff Scott Jones’ employment at The Lodge at Torrey Pines Partnership (The Lodge). Jones worked in the position of “outlet manager” and was responsible for the hotel’s restaurant, bar, catering, banquet events and the beverage cart service for the golf course. He claimed that his manager Jean Weiss and the kitchen manager continually used profanity, made sex-related comments around Jones and aimed “gay-bashing” jokes at him. Complaints by Jones and female employees went unheeded. Jones alleged that Weiss responded to his complaint by intimidation, continued offensive comments, excluding him from meetings and issuing Jones written warnings for tardiness and other work performance issues. Jones eventually resigned and sued The Lodge, Weiss, and others. He alleged ™ a Littler Mendelson Time Sensitive Newsletter A S A P in this issue: March 2008 The California Supreme Court Narrowly Rules That Individuals Are Not Liable for Retaliation in Some The california Supreme Circumstances court rules that individual nonemployers are not liable for By James E. retaliation, but leaves open the Hart In a 4-3 decision, the California Supreme Jones extends Baird’s reasoning to retaliissue of individual liability for Court in Jones v. The Lodge at Torry ation claims. retaliation that is in response to Pines Partnership, found that nonema complaint of harassment. Equally important are the rulings not ployer individuals (e.g., supervisors) are made by the majority in Jones. The court not personally liable for claims of retalideclined to decide whether an individual ation brought under California’s Fair who is personally liable for harassment Employment and Housing Act (FEHA), might also be personally liable for retaliat least when the retaliation is not in ating against someone who opposes or response to actionable harassment. The reports the same harassment. Nor has case resolves an unsettled question the court expressly closed the door on brought to prominence by the 1998 individual liability where the adverse California Supreme Court opinion in employment action of a retaliation claim Reno v. Baird, 18 Cal. 4th 640 (1998). In Baird, the court held that nonemployer takes the form of harassment. As a result, the issue of individual liability for individuals cannot be held personally retaliation claims has not been entirely liable for discrimination under the FEHA resolved. because discrimination arises “out of the performance of necessary personnel Factual Background management duties” that are “an inherent The case stems from plaintiff Scott Jones’ and unavoidable part of the supervi-employment at The Lodge at Torrey sory function.” By contrast, nonemployer Pines Partnership (The Lodge). Jones individuals can be held personally liable worked in the position of “outlet man-for harassment, which “consists of a type ager” and was responsible for the hotel’s of conduct not necessary for performance restaurant, bar, catering, banquet events of a supervisory job” and is “presumably and the beverage cart service for the engaged in for personal gratification” or golf course. He claimed that his man-due to “meanness or bigotry, or for other ager Jean Weiss and the kitchen manager personal motives.” continually used profanity, made sex-re-Since Baird, the open question has been lated comments around Jones and aimed whether this reasoning extends to retali-“gay-bashing” jokes at him. Complaints ation claims. Like discrimination claims, by Jones and female employees went retaliation claims require an adverse unheeded. Jones alleged that Weiss employment action (i.e., a change to the responded to his complaint by intimiterms and conditions of employment) dation, continued offensive comments, that inherently arises out of the perfor-excluding him from meetings and issumance of supervisory functions. If the ing Jones written warnings for tardiness reasoning of Baird were applied to retali-and other work performance issues. ation claims, then no individual liability Jones eventually resigned and sued The would result. The majority opinion in Lodge, Weiss, and others. He alleged Littler Mendelson is the largest law firm in the United States devoted exclusively to representing man iang eemmepnlot yment and labor law matters. The National Employment & Labor Law Firm™ 1.888.littler www.littler.com info@littler.comDocument hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=211ba819-15a9-4d70-be7b-cf371afbc87b& 1.888.littler www.littler.com info@littler.com ASAP™ is published by Littler Mendelson in order to review the latest developments in employment law. ASAP™ is designed to provide accurate and informative information and should not be considered legal advice. A S A P sexual orientation harassment and retaliation among his claims. Following a trial, the jury returned a verdict for Jones against both The Lodge and Weiss. The trial court overturned the verdict, finding, in part, that as an individual, Weiss could not be liable for retaliation. On appeal, the court disagreed and reinstated the original verdict, ruling that an individual can be held liable for retaliation under the FEHA. The California Supreme Court agreed to review the question of whether an individual may be held personally liable for retaliation under the FEHA. The Supreme Court’s Analysis The analysis of the four-member majority opinion concentrates on the precise language in California Government Code section 12940, subdivision the FEHA, which defines retaliation. The majority opinion first determined that the retaliation language is ambiguous, requiring the court to assign a meaning. The statutory retaliation language states that it is unlawful “[f]or any employer, labor organization, employment agency, or person to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.” The court found the term “person” as used in the statute had no plain meaning because it could refer to a “person” as an individual or a “person” as an agent or employee. To support its finding of ambiguity, the majority contrasted the retaliation provision with an explicit harassment provision, which provides that an employee “is personally liable for any harassment prohibited by this section that is perpetrated by the employee...” Following the general line of reasoning set forth in Baird, the court ruled that the statute should not permit individual liability because retaliation, like discrimination, requires “adverse employment actions,” which arise out of the performance of necessary personnel management duties. The court emphasized that the retaliation section explicitly references discrimination, providing further indication that personnel action is needed for retaliation. The court further noted that the term “person” is used elsewhere in the FEHA, without implicating individual liability. For example, the definitions of “employer” and “unlawful employment practice” include references to “persons.” Finally, the court observed that the legislative history did not support the interpretation of “person” as indicating individual liability. The court also considered policy reasons that could impact the interpretation of the language, noting that the following policy concerns had earlier supported a finding in Baird that there should be no imposition of individual liability for discrimination: individual supervisory employees would do little to enhance the ability of victims of discrimination to recover monetary damages given that the employer is generally the “primary target”; Individual liability can reasonably be expected to “severely impair the exercise of supervisory judgment” and cause supervisors to make decisions that are least likely to lead to discrimination claims. “If every personnel manager risked losing his or her home, retirement savings, hope of children’s college education, etc., whenever he or she made a personnel management decision, management of industrial enterprises and other economic organizations would be seriously affected”; Corporate decisions are often made collectively by a number of persons and it would be difficult to apportion individual blame if individual liability were permitted; and The FEHA only imposes liability on employers with at least 5 employees, and “[n]o reason appears” why the Legislature would exempt such small employers from discrimination, but not individuals. The majority found that all of these reasons for not imposing individual liability for discrimination applied equally to retaliation. Indeed, the majority recognized that “some may apply even more forcefully to retaliation claims. If an employee gains a reputation as a complainer, supervisors might be particularly afraid to impose discipline on that employee or make other lawful personnel decisions out of fear the employee might claim the action was retaliation for the complaining.” As a result, the court found that as a matter of statutory construction and policy considerations, liability for retaliation claims should be confined to the employer and not individuals as well. The Dissenting Opinion Justice Moreno, joined by two other justices, authored a dissenting opinion, which concluded that the statutory retaliation language plainly contemplated individual liability by prohibiting “any person” from retaliating. The dissent further argued that by providing individual liability for harassment, “it logically follows that, at a minimum, there must also be individual liability for any connecting retaliation of the harasser.” In terms of policy considerations, Judge Moreno believed that the majority’s opinion may incentivize a supervisor who has sexually harassed a subordinate to then retaliate if the subordinate complains. Implications for Future Cases The court failed to resolve a significant issue in its opinion. In footnote 4, the majority explicitly declined to consider whether a supervisor who is personally liable for harassment can also be personally liable for retaliating against someone who reports or opposes that harassment. For its part, the dissent spent considerable time on this very point. The majority stated, however, that the case did not present that situation, because a lower court had ruled in an earlier binding decision that there was no actionable harassment on the part of Weiss. Neither the majority nor dissent explic-™ The National Employment & Labor Law Firm™ A S A P 1.888.littler www.littler.com info@littler.com sexual orientation harassment and retali-court emphasized that the retaliation sec-The majority found that all of these reasons ation among his claims. tion explicitly references discrimination, for not imposing individual liability for providing further indication that person-discrimination applied equally to retalia-Following a trial, the jury returned a vernel action is needed for retaliation. The tion. Indeed, the majority recognized that dict for Jones against both The Lodge and court further noted that the term “person” “some may apply even more forcefully to Weiss. The trial court overturned the veris used elsewhere in the FEHA, without retaliation claims. If an employee gains a dict, finding, in part, that as an individual, implicating individual liability. For exam-reputation as a complainer, supervisors Weiss could not be liable for retaliation. ple, the definitions of “employer” and might be particularly afraid to impose On appeal, the court disagreed and rein-“unlawful employment practice” include discipline on that employee or make other stated the original verdict, ruling that an references to “persons.” Finally, the court lawful personnel decisions out of fear individual can be held liable for retali-observed that the legislative history did the employee might claim the action was ation under the FEHA. The California not support the interpretation of “person” retaliation for the complaining.” Supreme Court agreed to review the quesas indicating individual liability. tion of whether an individual may be held As a result, the court found that as a matter personally liable for retaliation under the The court also considered policy reasons of statutory construction and policy con-FEHA. that could impact the interpretation of siderations, liability for retaliation claims The Supreme court’s the language, noting that the following should be confined to the employer and analysis policy concerns had earlier supported a not individuals as well. finding in Baird that there should be be no The Dissenting Opinion The analysis of the four-member major-imposition of individual liability for disity opinion concentrates on the precise crimination: Justice Moreno, joined by two other juslanguage in California Government Code tices, authored a dissenting opinion, which section 12940, subdivision (h) of the • Imposing liability on individual concluded that the statutory retaliation supervisory employees would do lit-FEHA, which defines retaliation. The language plainly contemplated individual tle to enhance the ability of victims of majority opinion first determined that liability by prohibiting “any person” from discrimination to recover monetary the retaliation language is ambiguous, retaliating. The dissent further argued damages given that the employer is requiring the court to assign a meaning. that by providing individual liability for generally the “primary target”; The statutory retaliation language states harassment, “it logically follows that, at that it is unlawful “[f]or any employer, • Individual liability can reasonably a minimum, there must also be individual labor organization, employment agency, be expected to “severely impair the liability for any connecting retaliation or person to discharge, expel, or oth-exercise of supervisory judgment” of the harasser.” In terms of policy conerwise discriminate against any person and cause supervisors to make deci-siderations, Judge Moreno believed that because the person has opposed any sions that are least likely to lead to the majority’s opinion may incentivize a practices forbidden under this part or discrimination claims. “If every per-supervisor who has sexually harassed a because the person has filed a complaint, sonnel manager risked losing his or subordinate to then retaliate if the subortestified, or assisted in any proceeding her home, retirement savings, hope dinate complains. under this part.” The court found the term of children’s college education, etc., Implications for Future “person” as used in the statute had no whenever he or she made a personnel cases plain meaning because it could refer to a management decision, management “person” as an individual or a “person” as of industrial enterprises and other The court failed to resolve a significant an agent or employee. To support its find-economic organizations would be issue in its opinion. In footnote 4, the ing of ambiguity, the majority contrasted seriously affected”; majority explicitly declined to consider the retaliation provision with an explicit whether a supervisor who is personally • Corporate decisions are often made harassment provision, which provides liable for harassment can also be personcollectively by a number of persons that an employee “is personally liable for ally liable for retaliating against someone and it would be difficult to apportion any harassment prohibited by this section who reports or opposes that harassment. individual blame if individual liability that is perpetrated by the employee...” For its part, the dissent spent considerable were permitted; and time on this very point. The majority stat-Following the general line of reasoning set • The FEHA only imposes liability on ed, however, that the case did not present forth in Baird, the court ruled that the statemployers with at least 5 employees, that situation, because a lower court had ute should not permit individual liability and “[n]o reason appears” why the ruled in an earlier binding decision that because retaliation, like discrimination, Legislature would exempt such small there was no actionable harassment on requires “adverse employment actions,” employers from discrimination, but the part of Weiss. which arise out of the performance of necnot individuals. essary personnel management duties. The Neither the majority nor dissent explic-2 aSaP™ is published by Littler Mendelson in order to review the latest developments in employment law. aSaP™ is designed to provide accurate and informative information and should not be considered legal advice. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=211ba819-15a9-4d70-be7b-cf371afbc87b& 1.888.littler www.littler.com info@littler.com ASAP™ is published by Littler Mendelson in order to review the latest developments in employment law. ASAP™ is designed to provide accurate and informative information and should not be considered legal advice. A S A P itly acknowledged a similar issue – is there individual liability when the adverse employment action in a retaliation claim takes the form of harassment? In a separate case, Yanowitz v. L’Oreal USA, Inc., 36 Cal. 4th 1028 (2005), the court in dicta suggested that if sufficiently severe and pervasive, workplace harassment may in and of itself constitute an adverse employment action. Another open question is whether individual liability will attach when, in response to protected activity, the supervisor or other employee responds with harassment that is sufficiently pervasive to change the terms and conditions of employment. As a practical matter, the case is good news for employers for several reasons. It should allow the removal of many cases to federal court that otherwise could not be removed. A typical plaintiffs’ counsel strategy is to name an individual defendant in order to prevent federal court “diversity” jurisdiction. This decision should limit use of this long-employed tactic. Moreover, of obvious benefit is the fact that individual supervisors will not be held personally liable for retaliation, and thus will not be chilled in making necessary personnel decisions concerning a previously complaining employee by the fear of being personally sued. While the court did not fully decide all of the individual liability issues that may arise in the future regarding alleged retaliatory acts, the opinion is good news for employers. James E. Hart is a Shareholder in Littler Mendelson’s Orange County, CA office. If you would like further information, please contact your Littler attorney at 1.888.Littler, info@littler.com, or Mr. Hart at jhart@littler.com. ™ The National Employment & Labor Law Firm™ A S A P 1.888.littler www.littler.com info@littler.com itly acknowledged a similar issue -is there individual liability when the adverse employment action in a retaliation claim takes the form of harassment? In a separate case, Yanowitz v. L’Oreal USA, Inc., 3C6al. 4th 1028 (2005), the court in dicta suggested that if sufficiently severe and pervasive, workplace harassment may in and of itself constitute an adverse employment action. Another open question is whether individual liability will attach when, in response to protected activity, the supervisor or other employee responds with harassment that is sufficiently pervasive to change the terms and conditions of employment. As a practical matter, the case is good news for employers for several reasons. It should allow the removal of many cases to federal court that otherwise could not be removed. A typical plaintiffs’ counsel strategy is to name an individual defendant in order to prevent federal court “diversity” jurisdiction. This decision should limit use of this long-employed tactic. Moreover, of obvious benefit is the fact that individual supervisors will not be held personally liable for retaliation, and thus will not be chilled in making necessary personnel decisions concerning a previously complaining employee by the fear of being personally sued. While the court did not fully decide all of the individual liability issues that may arise in the future regarding alleged retaliatory acts, the opinion is good news for employers. James E. Hart is a Shareholder in Littler Mendelson’s Orange County, CA office. If you would like further information, please contact your Littler attorney at 1.888.Littler, info@littler.com, or Mr. Hart at jhart@littler.com. 3 aSaP™ is published by Littler Mendelson in order to review the latest developments in employment law. aSaP™ is designed to provide accurate and informative information and should not be considered legal advice. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=211ba819-15a9-4d70-be7b-cf371afbc87b

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